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Exercises · Q10

Q.Why, despite being considered a superior measure, is Green GDP not yet used as the primary official income measure by most economies, including India?

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While Green GDP is conceptually a more complete and honest measure of an economy's true income and sustainability than conventional GDP, it faces a genuine practical, measurement difficulty: putting a reliable, agreed monetary value on things like a depleted forest, a degraded river's lost water quality, or lost biodiversity is far harder than valuing goods and services that are already bought and sold in ordinary markets, which have observable prices.

Because marketed goods and services have clear transaction prices, GDP can be computed relatively straightforwardly from them. Natural-resource depletion and environmental degradation, by contrast, do not have an equivalent market price — estimating their value requires methods that are still evolving and often produce different results depending on the assumptions used. This measurement difficulty is the honest, practical reason Green GDP — though widely discusse …

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